A recent trend in the pharmaceutical industry has been for large pharmaceutical companies to acquire or merge with PBMs (prescriptionlpharmacy-benefits-management companies). Merck started this trend in November 1993 by merging with a PBM named Medco; two other pharmaceutical giants have followed suit. Since such mergers are a recent phenomenon, their full-scale implications are as yet unknown and there is little regulation in place specifically to address their potential effects. This essay describes the current state of affairs of PBM-pharmaceutical company alliances and explores their implications for the pharmaceutical and health care industries and the players involved. It further discusses the regulatory bodies involved, the measures they have taken to date, and possible future courses of action.